{"id":6529,"date":"2023-10-28T21:37:02","date_gmt":"2023-10-28T21:37:02","guid":{"rendered":"https:\/\/infundpros.com\/markets\/crypto\/a-lot-of-people-got-hurt\/"},"modified":"2023-10-28T21:37:03","modified_gmt":"2023-10-28T21:37:03","slug":"a-lot-of-people-got-hurt","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=6529","title":{"rendered":"A lot of people got hurt"},"content":{"rendered":"
\n

Bankman-Fried began his formal testimony in front of the jury shortly before 10 a.m. this morning in his landmark fraud case.<\/p>\n

It comes after his \u201cdry-run\u201d in front of Judge Kaplan yesterday afternoon following disputes between the prosecution and defense over what the defendant could discuss in his testimony.\n<\/p>\n

\u201cA lot of people got hurt\u201d<\/h2>\n

\nOn the stand, the disgraced FTX founder claimed he set out to \u201cbuild the best product on the market\u201d but ended up doing \u201cthe opposite.\u201d<\/p>\n

\u201cA lot of people got hurt,\u201d Bankman-Fried stated.<\/p>\n

While Bankman-Fried denied intentionally defrauding customers, he admitted to making \u201ca number of small mistakes and a number of large mistakes.\u201d<\/p>\n

\u201cBy far, the biggest mistake was not having a risk management team,\u201d he concluded.\n<\/p>\n

Alameda Research\u2019s role on FTX<\/h2>\n

\nThe defense argued that while Alameda Research was the primary market maker for FTX, it consisted of only 3% of all orders in 2022. \u00a0Pointing out FTX\u2019s rapid growth, Bankman-Fried alleged Alameda Research processed billions of dollars a day that required collateral. It was for this reason, Bankman-Fried argued, that the trading firm required a large line of credit.<\/p>\n

Bankman-Fried testified that Alamadea Research was allowed to borrow money from FTX\u2019s exchange \u201cso long as we believed the risk was being managed.\u201d<\/p>\n

Part of managing this risk included the implementation of their automated risk engine, which they believed to be \u201cbetter\u201d than those used on other exchanges. However, in 2020, the risk engine became stuck in a feedback loop that caused a mass auto-deleveraging event that could have cost the change trillions of dollars if it had been unable to be corrected.<\/p>\n

At this point, Bankman-Fried instructed FTX\u2019s chief technical officer, Gary Wang, and FTX\u2019s head of engineering,g Nishad Singh to construct a feature that would prevent the \u201cerroneous\u201d liquidation of Alameda Research\u2019s account on FTX\u2019s exchange. This led to the creation of the \u201callow negative\u201d coding and \u201cdelayed liquidation\u201d process, though Bankman-Fried denied having specific knowledge of how they exactly worked exactly.\n<\/p>\n

\u201cI wasn\u2019t entirely sure what was happening at the time\u201d<\/h2>\n

\nBankman-Fried further testified that customer funds were stored in an omnibus wallet together, while FTX digital assets were kept separated from them. Moreover, the FTX founder claimed that fiat transfers through the crypto exchange went through Alameda\u2019s bank accounts.<\/p>\n

\u201cFTX didn\u2019t custody those funds,\u201d Bankmn-Fried said, \u201cAlameda did.\u201d<\/p>\n

These transfers were then processed by a settlements team consisting of 5 \u2013 10 people, though Bankman-Fried \u201cwasn\u2019t entirely sure what was happening at the time.\u201d<\/p>\n

He will continue his testimony this afternoon.<\/p>\n

\n
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Bankman-Fried began his formal testimony in front of the jury shortly before 10 a.m. this morning in his landmark fraud case. It…<\/p>\n","protected":false},"author":1,"featured_media":6530,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[],"class_list":{"0":"post-6529","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-crypto"},"yoast_head":"\nA lot of people got hurt | inFundPros<\/title>\n<meta name=\"description\" content=\"Bankman-Fried began his formal testimony in front of the jury shortly before 10 a.m. this morning in his landmark fraud case. 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